How Will the July 2015 Budget Affect Landlords?

George Osbourne’s recent budget featured changes to tax relief that will likely have a significant impact on landlords across the country, especially in big cities such as London, Birmingham, and Nottingham.
The biggest news is that the overall tax relief will, over the next five years, drop to the same rate of VAT, at 20%. This, combined with the abolishment of “non-domiciled” status in the UK, will kill many offshore property investment companies. George Osbourne claims that this will result in more of a a “level playing field.”
However, one change that’s getting less publicity concerns the 10% tax break for repairs to wear and tear.
Previously, 10% of paid rent was automatically tax deductible. Now, though, the tax relief can only be granted when actual repair work has been carried out. So while landlords can currently enjoy tax relief regardless of whether they maintain their properties, under the new rules, landlords will only be able to claim for actual costs incurred while making repairs.

This change will affect the profit margins for the majority of landlords, in particular, those charging high rents with small maintenance costs. This will likely have a knock-on effect for tenants, especially those renting in popular inner city areas, where landlords may have no choice but to raise rents even higher.
Obviously, rising rents may worsen the housing crisis. As more funds are set aside for monthly rents, first-time buyers will find it even harder to get onto the property ladder. In areas such as Nottingham, where population increases outweighs the number of new homes available, younger adults may find it harder than ever to buy their first home.
Another change in the budget concerns the tax relief available for landlords who rent out their own homes, which has risen from £4,250 to £7,250 a year. These changes could potentially boost the popularity of single room rentals and shared accommodation schemes.
Finally, in a move that will affect some of our bigger and older properties, the inheritance tax threshold is being raised to above £500k for individuals, or above £1m for couples. Meanwhile, the older generations sitting on larger estates are being tempted to free them up with a new “inheritance tax credit”. This allows them to receive the same tax threshold in the future, even if they downsize in the present, but only if property is passed on to family members.
How will the 2015 budget affect you? Pop in to our Nottingham office or speak to us on 0115 958 7791 for landlord advice and property management services.

Voted the best Nottingham letting agents 2013, 2014 & 2015
Customer service is our number one priority

© Company | Sitemap | Terms | Privacy Policy | Design and powered by gnomen.